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15 July, 2013

Tom Arnold

We have a very busy week ahead of us on the markets, and things are already hotting up with some rumours doing the rounds that France – the second biggest Eurozone economy – might be on the verge of having its sovereign credit rating downgraded. The Euro hasn’t collapsed on this news, but given its potential vulnerability after Mario Draghi last week said that interest rates were going to stay as low as they are now, if not lower, for a long time to come, watch this space for some volatility as the week’s data comes out.

Today is otherwise a fairly slow start to the week, with a complete absence of UK or European data and the only releases of note being US retail sales figures and a speech by FED member Tarullo at lunchtime. Will he give any more indication of the FED’s position, after the almost contradictory statements from Ben Bernanke over the last two months?

Tomorrow however is when things really start to gather pace, with UK CPI and RPI inflation, UK producer price index, European CPI inflation, US CPI inflation and finally at some point the new Bank of England governor will be writing to the Chancellor to explain why inflation is still over the 2% target. So a huge amount of data, which will almost certainly cause a very volatile day – inflation is relatively high all around, but no one has the movement of interest rates to use as a weapon of control…

Wednesday is probably the most important day for UK releases with the minutes from the Bank of England’s monthly policy meeting and the monthly unemployment number. The new governor; Mark Carney surprised the markets, by giving much more away than his predecessor used to when they made the statement at the start of the month, and this is widely expected to continue, with many expecting a lot more clarity from Carney and “forward guidance” to be very much on the cards. Unfortunately for the Pound, being open and upfront with the markets, when your message very much revolves around low interest rates and possible injections of liquidity, is unlikely to lead to any helpful movement for those of you looking to send your money overseas.

Thursday and Friday are quite a bit quieter, but still throw us UK retail sales, some more US jobs figures, another speech from Ben Bernanke, and some German industrial numbers.

With so much critical data on the horizon make sure you stay in close touch with your CI account manager to be kept best informed on how the movements will affect your upcomingcurrency requirement .